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Want to read what's on your competitor's computer from a mile away? The technology exists, and it's for sale. There's just one problem: You could end up in prison.

In an Alexandria office last July, an unknown American salesman put on one of the most remarkable product demonstrations in recent business history. His best customer-his only customer, in fact-had just flown in from Thailand to see him. The buyer, an Israeli, had a wad of crisp American bills in his wallet. But he wasn't about to hand them over without a show.

So that's exactly what the salesman gave him.

First, he turned on an ordinary personal computer. Then he began typing with abandon, until random text filled the 14-inch computer screen.

Then the salesman walked to an adjacent room and hoisted a 40-pound metal briefcase onto a desk. He flipped it open, revealing what appeared to be a laptop monitor mounted on the upper half of the briefcase. But there was no keyboard below. Instead, the bottom half of the briefcase was crammed with electronics-odd dials, wires, a thick bendable antenna and input/output jacks.

As the Israeli looked on, the salesman pointed the flexible antenna across the room. He fidgeted with some dials and the portable monitor seemed to come alive. In seconds, the same letters displayed on the desktop computer in the other room popped onto the salesman's laptop screen. The two machines were 20 feet apart, separated by a wall and not connected by any wires. And yet, one was instantly displaying the other's text.

The Israeli was sold. The machine he had been trying to buy for a year actually worked, allowing one secretly to monitor what is on a computer's screen from a remote location. He had already paid the salesman a $15,000 deposit. Now he owed him $15,000 more. So, as a trade, he handed the salesman a valuable contraption of his own. It was a fax-intercept machine, capable of stealing text from any fax machine without leaving a trace.

The Israeli was closing the deal when the salesman asked to take a breather. But just as he opened his office door, a small team of armed FBI and customs agents blew past him. A federal agent in a bulletproof vest approached the Israeli and cuffed him.

The sting couldn't have gone much smoother. The Israeli never suspected that the office was a front for the FBI. He never saw the microphones and video cameras hidden in the walls. And he never seemed to doubt that the ingratiating salesman who fed him bagels and sweet coffee that Tuesday morning was an undercover FBI agent.

The Alexandria arrest exposed the shadowy world of Shalom Shaphyr, a 53-year-old Israeli entrepreneur who lives in Vietnam, has offices in England and buys and sells surveillance equipment worldwide. In October, he pleaded guilty in Alexandria to violating the Arms Export Control Act, and faces sentencing in December. But Shaphyr's bust also cast unwanted attention on a form of electronic espionage that few Americans have ever heard of. And that's just how American law-enforcement and intelligence agencies would prefer it to stay.

Any Radio Shack sales associate can tell you that all electrical devices produce a magnetic signal. Your clock radio sends out a magnetic field. So does your blender. And the same is true for your computer.

Type the word, "Private," onto your computer keyboard, and it beams out an electromagnetic "Private" into the air. Enter your password, "Yoohoo," let's say, and your secret affection for chocolate beverages is transmitted out into the ether as well.

But few computer users realize that all those signals computers emits can be received, too, and with such ease that a spy runs only a minimal risk of detection. "The computer screens that we once thought were private are, in fact, veritable radio stations," writes author Winn Schwartau in Information Warfare. "PIN numbers or other potentially sensitive information can be detected, stored, and decoded with the right equipment in the right hands."

Scientists at America's defense and intelligence agencies have known the secret for 40 years. At first, their main worry was that foreign agents would steal encrypted messages. So, under the codename TEMPEST, they devised a set of standards to limit electromagnetic radiation from electric typewriters and other gadgets. Today, an entire industry exists to do the same. Under a classified National Communications Security directive, countless federal agencies and their contractors must try to reduce the leakage of magnetic radiation from all sorts of devices that transmit and store sensitive information.

Soviet agents with long-range electromagnetic receivers placed in vans or even city high-rises were always the greatest fear. But since 1985, our own spooks have fretted that any boob with a TV, an antenna and a great set of instructions could join the fun. That was the year that a Dutch scientist, Professor Wim Van Eck, published an unclassified article called, "Electromagnetic Radiation from Video Display Units: An Eavesdropping Risk?" The paper was meant to warn the scientific community that one could covertly receive computer signals from a kilometer away. It had the unintended effect of advertising the communications quirk to the masses.

Today, an electronic game of spy vs. spy is played out on desktops all around Washington. From the Oval Office to the executive suite of the smallest defense contractor in northern Virginia, tens of thousands of computers, keyboards, monitors, printers, scanners, and even mice are shielded with copper or other conductive materials to shut spies out. Most professionals describe the protected equipment as

"TEMPEST-certified." Others, in homage to the master, simply say that the shielded goods are safe from "Van Eck radiation."

No one-even the National Security Agency-knows how frequently American computers are spied upon. That's the beauty and the bane of a technology that doesn't require picked locks or tricked guards to be a success. The bad guys don't leave fingerprints.

But the barriers to ownership of a receiver are considerable. For starters, it's illegal. Possession alone can lead to a five-year jail sentence if you know the device can or will be used to spy on someone else's computer. Then there's the daunting pricetag. A reliable unit that will hold a signal, easily penetrate a window and allow you to do your work from a comfortable distance can cost from $50,000 to a half million dollars. And then there are those pesky, self-righteous dealers with all their questions. Most are authorized only to sell their products to the feds and federal subcontractors. The dealers risk losing their security clearances (a.k.a. their livelihoods) if they sell off campus.

Which explains the appeal of the Internet. Talk is cheap on the Web, of course, but the offers are tantalizing. One Web site sells "Van Eck Display" manuals for just $29 that promise to teach buyers "eavesdropping on computer and TV CRT video signals using an ordinary TV." Another Web site lists a menu of commonly available parts, complete with serial numbers, that an amateur would need to build a TEMPEST receiver at home (a feat that even veteran TEMPEST engineers doubt they could pull off.) And yet another Web merchant, named SpyKing, hypes a pre-built "Tempest Monitoring System" that can capture "the dominant video signal generated by anycomputer" up to 1,000 yards away. It's coyly marketed as a "countermeasures tool" to give TEMPEST technicians a way to monitor their own computer emissions. The cost: $20,000. "I get requests on a daily basis" from prospective buyers, says Frank Jones, the owner of the New York-based company that makes the $20,000 unit. "They want to spy on people, simple as that. They say, ' I want to spy on my professor, on my wife,'" Jones adds.

So the risk is real. But it's also quite limited. Few legitimate security pros now advise average computer owners to begin wrapping their laptops in lead. They say the probability that a neighbor-or a government agent-will spy on the radiation coming from your computer is comically low.

It's just that kind of annoying, rational thinking that is killing an entire commercial sector in northern Virginia. Once the capital of the TEMPEST-protection industry in America, northern Virginia has watched a dozen TEMPEST firms go the way of the Commodore computer.

While Beltway bankers, lawyers, and Internet innovators presumably want to keep their computers' secrets safe, "it's a hard sell," says the owner of a still-thriving Reston, Virginia firm that sells TEMPEST-protected computers to the government. He says Washington-area business types cringe when they learn that every piece of TEMPEST-shielded computer equipment costs about three times more than

normal. And, he laments, he can't even prove to potential customers how easy it would be to sit in a van outside their offices and secretly steal data from their computers. "I have to say, 'Sorry, I can't show you. That's a classified demonstration.'"

Meanwhile, even the government has been cutting back. While Pentagon three-stars still need shielded hard drives and cables and modems, he says, the brass at many of the nation's more remote military bases are taking a pass.

The lagging interest in TEMPEST technology was foreshadowed in 1991, when the CIA inspector general suggested that hundreds of millions of dollars had been spent protecting against a vulnerability with a low probability of exploitation. Three years later, security pros working for the CIA and Pentagon agreed. They reasoned that foreign governments would likely do their computer spying from the relative safety of home. "The rationale is that a foreign government would not be likely to risk a TEMPEST collection operation in an environment not under their control," the experts wrote. While "the domestic threat is minimal," the government spooks concluded, they recommended implementation of "an active overseas TEMPEST program."

Shalom Shaphyr is an overseas frequent flier. A certified amateur pilot, he was born in Israel, lives with his family in Ho Chi Minh City, and frequently visits the United States on a bona fide business visa. From the start of his failed shopping spree, he made clear that he was just an international middleman. The computer monitoring system he tried so hard to buy in Virginia was destined for a wealthy client: The Interior Ministry of the government of Vietnam.

In July 1998, Shaphyr started to send out feelers. He had a contact in Arlington, Virginia write an e-mail on his behalf to the Internet merchant, SpyKing-the New York firm that sells that $20,000 TEMPEST monitoring system. SpyKing's owner, Jones, provided Regardie's POWER with a copy of several of Shaphyr's e-mail inquiries.

"I have been working with Mr. Shalom Shaphyr in his efforts to identify and purchase TEMPEST shielding, monitoring, and testing products for the government of Vietnam," Shaphyr's associate wrote in one of the e-mails. "Funding for the purchase of this technology is in the current budget cycle."

Later, Shaphyr e-mailed SpyKing directly from Vietnam. Then one day, Jones says, the stocky, bearded Israeli paid a surprise visit to Jones's Westchester offices. Jones was immediately suspicious: "Here's a guy with a foreign accent, very mysterious, says he heard about me through a European contact."

Jones says Shaphyr claimed he worked for the Mossad, the Israeli intelligence agency, and needed a receiver that could covertly monitor computer transmissions from a distance of 1,000 meters. But the surveillance-equipment maker didn't buy the story and refused to sell his wares. Jones grew so skeptical of Shaphyr that he tape recorded their meeting. But the Internet SpyKing never bothered to inform the FBI or any law-enforcement agency of the Israeli's plans. "We've tried to report this stuff before, but it falls on deaf ears," Jones says.

Shaphyr was not to be defeated. From his offices in Vietnam and England, he kept working his sources. In November, he contacted an unnamed American businessman who also sells high-end security equipment. Paydirt. The middleman knew how to get the product Shaphyr wanted. There was just one problem. The broker was a trusted FBI snitch.

By December of last year, Shaphyr's new friend had quietly ratted him out to the FBI. "Shaphyr told the Confidential Informant that his client was the Vietnamese government, which wanted the equipment for intelligence purposes," an FBI affidavit would later reveal.

The FBI moved an undercover agent into place, who earned Shaphyr's trust. From February to June of this year, Shaphyr traded e-mails and phone calls with the special agent, who posed as an Alexandria-based salesman of black-bag spook gear. At Shaphyr's urging, they used an encrypted software program to exchange e-mail messages. And, the government says, Shaphyr insisted they use a code name, "Candy," to refer to the computer surveillance monitor he wanted to buy. Although Shaphyr told the undercover agent he intended to sell it to a private company to detect copyright infringement, the government wasn't convinced. Shaphyr "planned to export the [machine] to the Vietnamese Ministry of Interior, an intelligence-gathering agency," U.S. prosecutors argued in court. A Vietnamese government spokesman in Washington denies any involvement with the Israeli. (Shaphyr, who is locked up in the Alexandria Detention Center, declined an interview request.)

Shaphyr flew from Taiwan to Virginia last April to meet the friendly American salesman and set a price. They discussed how to get the machine out of the country, and the Israeli entrepreneur suggested they could first ship it to a NATO country and then divert it to Vietnam.

The undercover FBI agent had already told Shaphyr, in a recorded phone call, that shipping the computer-monitoring unit may be a problem. In reality, a Stinger missile is almost as tightly controlled. Under the Arms Export Control Act, it is illegal to own the TEMPEST monitoring equipment and to export it without written approval from the State Department. And State simply doesn't allow $30,000 computer spying gear to be shipped to Vietnam. When the undercover agent told Shaphyr the costly gadget may be restricted, he could merely stammer: "[If] there's a problem, I'll have, I'll have, I'll have to think, I'll have to think about what we'll do, what we're going to do because we have, we have a real, we have a real project."

Last July, Shaphyr flew back to Alexandria to wrap up the "real project." Inside the undercover FBI office, Shaphyr watched with glee as the salesman demonstrated the capabilities of his new $30,000 toy. Later, he allowed the salesman to introduce him to a shipping expert, who turned out to be an undercover U.S. Customs agent. Shaphyr handed the man $2,000 in cash to export the machine without a license. On shipping papers, Shaphyr erroneously identified the device as "Video Test Reception equipment." Value: $1,500.

Moments later, the team of armed federal agents had Shaphyr in custody. If the arrest came as a shock, Shaphyr never showed it. "The guy acted like he was catching a bus," one observer would later comment. "He had no concerns at all."

Shaphyr's lawyers waged a valiant, if brief, battle. They shot down the government's attempts to cast the matter as an espionage case. They argued in court that the TEMPEST intercept equipment was outmoded, and that U.S. government agencies all used TEMPEST-shielded equipment that would easily defeat such crude surveillance attempts. But in the end, they helped Shaphyr to cop a plea.

In October, Shaphyr signed a Statement of Facts admitting that he had agreed to buy the computer intercept equipment and tried to export it without a license. In exchange for his cooperation, the government dropped charges against him for the sale of the fax-intercept machine.

Shaphyr has been locked up since July and, after his December sentencing, will likely serve a few more months behind bars. He'll soon head back to Vietnam, but the orders for TEMPEST-intercept equipment will keep coming in. "I have archived about 90 e-mail messages from the People's Republic of China," says Frank Jones, the Internet SpyKing. "They say they want my equipment for intelligence gathering."